Tesco eyes three-way private equity bid battle for $6m Korean arm

21st Aug 2015 13:24

(ShareCast News) - Private equity firms have reportedly formed three separate teams to bid for Tesco's South Korean unit, Homeplus.According to Reuters, which cited people familiar with the matter, Asia-based Affinity Equity Partners has joined up with US private equity firm KKR, an arm of Goldman Sachs.Washington DC-based Carlyle Group has teamed up with Singapore's sovereign wealth fund GIC.North Asia-focused private equity firm MBK Partners, meanwhile, will seek equity funding from South Korea's National Pension Service to bid for the unit.Reuters said the forming of the teams by the private equity firms reflects the huge size of the deal, which is valued at about $6bn and could potentially be the second-biggest merger in the Asian consumer sector.In May, Tesco was said to have rejected a £4bn bid for Homeplus business and last month the FTSE 100 grocery giant shortlisted Affinity Equity Partners, Carlyle Group, KKR and MBK Partners for the final round of bids.Tesco is looking to sell Homeplus in an attempt to cut its £22bn debts and fund a turnaround plan as it recovers from an accounting scandal and market share losses to discount chains and has hired HSBC to advise on the sale.In a June update the company reported another slip in sales, but said the decline was slowing. International like-for-like sales improved, although Korea and Thailand LFLs were down by just over 3% and 2% respectively.Tesco is also exploring sales of its other South East Asian units, with a February approach by Thai billionaire Dhanin Chearavanont in with an offer to buy its Thai operations, Tesco Lotus, while its Malaysian unit has also attracted interest.